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Cumulative Human Rights Impacts

“How should a responsible company identify and address its incremental contribution to a cumulative human rights impact, particularly an impact on an individual or a community that is the result of the combined actions of several actors?”

Cumulative Human Rights Impacts

This page presents an introduction to and analysis of the dilemma. It does so through the integration of real-world scenarios and case studies, examination of emerging economy contexts and exploration of the specific business risks posed by the dilemma. It also suggests a range of actions that responsible companies can take in order to manage and mitigate those risks.

"How
should a responsible company identify and address its incremental contribution to a cumulative
human rights impact, particularly an impact on an individual or a community that
is the result of the combined actions of several actors?"

When conducting
human rights due diligence, human rights risks are considered from the
perspective of the actual or potential impact on stakeholders.1 After identifying that stakeholders are experiencing an adverse
impact, and that the company is involved in that impact, responsible companies will
then attempt to remedy the impact. However, in certain circumstances stakeholders
may identify and report impacts that are the cumulative result of the:

The
concurrent, collective impacts of multiple companies (and other actors)

The cumulative
impacts of a company/companies (and other actors) over time

As such,
identifying the source of an adverse impact may not be as straightforward as
simply linking it back to a single company. For example, a community relying on
a water source may find that the source is polluted or depleted. The impact may
arise, not from one company's excessive water use or emissions, but from the cumulative
effect of four companies and several local farmers drawing from, or discharging
into, the same source. Whilst each actor on their own is not causing an impact,
the cumulative result of all of the water withdrawals may impact the right to
life, health, property or livelihood of the community. Similarly, whilst one
company advertising high sugar foods or beverages to children may not create a human
rights impact on its own, several companies, over time, targeting high-sugar
foods and drinks at children can have a cumulative impact on child obesity and the
right to health.

Cumulative impacts have been
described as "the only real effect[s] worth assessing"2, as they are what
individuals and communities in fact experience. This is particularly the case
given that patterns of development (and thus business activities) tend to be
concentrated on specific locations characterised by (for example) an abundance
of natural resources, logistical features such as ports, the presence of
suppliers/customers and other focal points. This can naturally increase the local
potential for cumulative impacts.

The environmental, social and health impact
assessment (‘ESHIA') field has long been addressing the concept of cumulative
impacts on the environment, and more recently, people. In August 2013, the International
Financial Corporation (IFC) published a Good Practice Handbook to provide guidance
to companies in respect of cumulative impact assessment and management in
emerging markets. This was in recognition of the need for companies to evaluate
impacts "that result from the successive, incremental,
and/or combined effects of an action, project, or activity … when added to
other existing, planned, and/or reasonably anticipated future ones."3

The Good Practice Handbook highlights the
following:

"The
importance of understanding the cumulative environmental and social impacts
from multiple projects, actions, or activities—or even from the same actions
over an extended period of time—located in the same geographic region or
affecting the same resource (e.g., watershed, airshed) has been acknowledged
for decades. In some cases, the most ecologically devastating environmental
effects and subsequent social consequences may result not from the direct
effects of a particular action, project, or activity but from the combination
of existing stresses and the individually minor effects of multiple actions
over time (Clarke 1994)."4

The IFC's Good Practice Handbook does not
explicitly address human rights impacts, however. Moreover, human rights due
diligence may differ from cumulative impact assessments in the ESHIA field
(which do not generally address human rights impacts per se) in a key respect: under
the UN Guiding Principles on Business and Human Rights companies must "cease or
prevent" their contributions to a negative human rights impact. This contrasts
with various regulatory obligations to "describe" or to "minimise" cumulative
impacts in the ESHIA field. Nonetheless, there are clear parallels that can be
drawn in the context of this dilemma.

In this context, at least one leading
extractive company – Rio Tinto – has acknowledged in its human rights policy
the challenge and importance of considering cumulative human rights impacts.5

The
role of business

The duty to protect individuals from human rights violations,
including cumulative human rights impacts, is part of the State's duty towards people
under its jurisdiction. Moreover, the State is often in the best position to
manage cumulative impacts through regional planning, or through industry-wide
regulation. History has shown, however, that States are not always able or
willing, to manage cumulative impacts. For example, the IFC's Good Practice Handbook describes a
situation in which 37 hydroelectric projects (2 existing projects, 9 under
construction and 26 proposed projects) were to occur within a single river
basin and the host country had no regulatory requirement for assessing the
total impacts of the projects together.6 Managing cumulative impacts requires an additional level of
knowledge, experience and capacity that may not be available at the State level
– particularly in developing countries or where emerging industries are
involved. Moreover, States may also be unable to manage cumulative impacts
where they occur across international (and sometimes even regional) borders.

As a result, corporate efforts to address
cumulative human rights impacts can be particularly important. This is
particularly the case given the potential scale and severity of such cumulative
impacts. Furthermore, according to Franks et al, management of cumulative
impacts can help companies:

Make better use of existing resources and
exploit opportunities for positive investments and
efficiency gains through reduced duplication

Benefit regional environments and
communities through their involvement in collaborative management of
resources

Contribute to an industry's social
license to operate

"Level the playing field" by more fairly
sharing allocation of "the burden of staying within limits or thresholds"
between companies, rather than allowing the last project in time to bear
it alone.7

There are, however, a number of factors that may
complicate companies' efforts in this respect.

The first complicating factor is that a company's
contribution to a cumulative impact is unlikely to be identified by
conventional risk assessments. Even where impact assessments seek to address actual
and potential human rights impacts, assessments that:

Are conducted on a one-off basis may not identify the cumulative effect of a company's
activities, products and services over time

Do not consider the baseline human rights
situation in the country of operation may miss
impacts that arise when corporate activities knowingly or unknowingly aggravate
existing issues

Do not consider other actors' contribution to
impacts may miss the cumulative impact being experienced
by the community and individuals, and the company's contribution to that
impact

The International Council on Mining and Metals (ICMM)
has noted that the following with respect to the latter point (in the context
of mining):

"Mining projects have historically concerned themselves primarily
with developments within their lease boundaries or connected to the
infrastructure associated with their mines. Impact assessments have
generally focused on the mine's direct impact area, usually within a defined
geographic space [emphasis added]."8

Cumulative impacts pose a particular challenge for risk
assessors as each company's individual activities, products and services may
not cause a human rights impact on their own – and may be entirely legal. However,
if a company's contribution to a cumulative impact is not identified in
assessments, companies may be left exposed and unprepared for the costs and/or
negative publicity that arise if or when their involvement in such an impact is
exposed.

Secondly, it can be difficult for companies to ascertain
the correct methodology to assess the cumulative impact being experienced by individuals,
and then to separate out their responsibility for contributing to the impact
from that of other contributors. To take our earlier example of a joint water
source, the company may be able to calculate its own water draw, but unable to
obtain data concerning the total amount of water drawn by other actors.
Likewise, a company advertising high-fat or sugar products to children may find
it difficult to separate out its own impact on childhood obesity from other
food companies engaging in the same practices and targeting the same consumers (both
current, past and future). Given the challenges of separating out and preventing
and/mitigating an individual company's contribution to a cumulative impact, one
potential solution is to address the issue through collaborative initiatives
(discussed further below in "Suggestions for Responsible Business").

There are, however, further potential challenges to be addressed when
using collaborative initiatives to address cumulative human rights impacts:

Other contributors to the impact may be diverse actors, including
some with whom the company may not usually collaborate, such as competitors
(including companies domiciled in other jurisdictions); governments; or
local individuals or groups, such as small-scale farmers

Where the impact has accumulated over a period of time, some
contributors may no longer be active or contactable

It can be difficult to ensure that the diffusion of responsibility
does not result in a lack of accountability for individual companies –
some of which are likely to be making more serious contributions to
cumulative impacts than others

It can be challenging for some companies to collaborate with others
whose management proficiency around human rights is less advanced than
their own. In such cases, leading companies may prefer to pursue their
own, unilateral initiatives

Companies who do try to drive collective initiatives to address cumulative
impacts may find it difficult to elicit cooperation from fellow
contributors – who may refuse to share information due to concerns around,
for example, proprietary information.

Thirdly, challenges for companies can also
arise when they attempt to remedy their contribution to cumulative impacts that
have already taken place. A responsible company that steps forward and publicises
the existence of the cumulative impact can attract adverse publicity that may
be disproportionate to its own (potentially limited) contribution to the
impact. It may also attract ill-will from other companies or governments whose
contribution to the problem then becomes public knowledge. Likewise, such
challenges can arise where a company that is contributing incrementally to
a cumulative impact establishes a grievance mechanism and allows stakeholders
to raise related concerns with them – particularly when other contributors have
not established such grievance mechanisms and/or do not acknowledge their own
contribution to the impact. Finally, without the involvement of the other
actors contributing to the impact, it may be that that the responsible company
cannot take action on its own that has any tangible effect on the impact being
experienced by the stakeholders.

Real
world examples

Stakeholders
refer UN Working Group to cumulative corporate impacts on grazing lands, water
availability and migration patterns in Asian state

When an expert from the UN's ‘Working Group on the issue
of human rights and transnational corporations and other business enterprises'
(UN Working Group) conducted a country visit to an Asian state and met with
government, industry and stakeholders, she found that cumulative impacts were
the most prevalent complaint from communities in relation to the impact of
corporate activities on human rights.9 For example, communities complained that:

Several companies together had been responsible for the cutting-off of their nomadic
grazing lands, with land purchases for mineral exploration by several
different companies in a given area ‘stranding' the grazing lands within a
patchwork of inaccessible areas. As a result, local communities claimed
that the herders' enjoyment of the rights to an adequate standard of
living and to take part in cultural life through farming and animal
husbandry has been impacted

The cumulative water use of several companies
that lowered the water table was resulting in the destruction of
pastureland and surface water resources. In addition to the rights noted
above, it is also claimed that this undermines the right to water, which
is "essential not only for the preservation of the nomadic lifestyle and
culture, but also for those who are living in towns across the region"10

The result of mineral exploration carried out by several
companies in a given area "required herders to move their herds to
more remote regions, for longer periods of time, limiting their access to
education, health care and social welfare services" 11

In May 2013 Human Rights Watch (HRW) issued a report12
critical of the resettlement of thousands of members of communities in Tete
province, Mozambique that took place between 2009-2011 to make way for coal
mining operations belonging to Vale (the Moatize mine) and Rio Tinto (the Benga
mine).13
Relocation of communities began in 2009, and took place in the absence of a
regulatory framework governing resettlement, and where "neither national nor
provincial authorities [had] systematically assessed…cumulative impacts", such
as the "cumulative economic, social, and environmental impacts of the natural
resource boom"14
In particular, 60% of the land in Tete province (as at 2012) was either subject
to mining concessions or exploration permits. Provincial government officials
and representatives of Vale and Rio Tinto interviewed by HRW all agreed that the
"limited land available due to crowding from numerous mining licenses" in the
province was an obstacle to resettlement plans.15 Both the companies and
the communities proposed alternative sites, however these were unavailable for
resettlement.

HRW cited a number of specific concerns from affected
communities, including the following:

Whereas they had previously
farmed fertile land adjacent to a river, the land on which many had been
resettled did not have sufficient access to water for farming and
residents complained of water costs and frequent shortages

Whereas communities had
previously sold firewood, charcoal and wild fruits from boab trees to
nearby markets to supplement their income, they no longer had access to
such resources and the resettlement areas are 40km from the nearest market

Resettled residents cited
concerns about food security. Whereas the community undertook farming and
had previously had proximity to natural food resources, many families
became dependent upon food packages and food for work programmes provided
by the mining companies, which some claimed was insufficient and caused
them to go hungry

HRW attributed the impacts on
rights to food, water, and work to "weak government oversight during a period
of rapid change" 16
as well as "serious shortcomings… in private companies' implementation"17
of resettlement plans. Resettled individuals interviewed by HRW claimed that
the government and companies respectively directed their concerns to the other
party. HRW notes that community protests blocking Vale's transportation railway
in January 2012 - in relation to "concerns about land, houses,
water, transport, and job opportunities"18 – brought a violent crackdown from the Mozambique
authorities.

The report notes that the companies concerned are undertaking various
programmes to try to alleviate the impacts. The government enacted a decree on
resettlement in 2012 and is in the process of updating the Mining Law; however,
it has previously noted challenges with respect to staff capacity due to the
difficulty of competing with private sector salaries. HRW concludes that "there
is little management and planning for the cumulative impact of numerous mining
projects on the environment, local community, and the economy".

In the mid-2000s, plans by two companies, Botnia and ENCE, to
build two pulp mills on the Uruguayan side of the Rio Uruguay (which divides
Uruguay from Argentina) caused diplomatic tensions between the two countries – and
eventually led to the matter being referred to the International Court of
Justice (ICJ). Residents of the Argentine city of Gualeguaychu (located across
the river and inland about 25km from the pulp plants) were concernedthat
the plants would "generate pollution which could destroy their main sources of
income, including tourism and agriculture"19
– and protesters blocked a busy, shared bridge linking the two countries.20 Framed in
human rights terms, the protesters feared the mills would impact their right to
an adequate standard of living and right to a safe and clean environment.

The dispute involved multiple complex factors, but one
notable aspect is that both companies involved had undertaken Environmental
Impact Assessments (EIAs) of their respective projects. Nonetheless, the IFC
decided that a further study of the cumulative impact of the two plants
together was required – and that such study should also address social issues, including
the effects on traffic, labour supply and tourism.21 The IFC's draft cumulative
impact assessment (released in 2005) concluded that the projects could go
ahead, and in July 2006 the ICJ declined to grant a provisional order halting
construction of the mills.22
In August 2006, however, ENCE decided to relocate its pulp mill to a different area
of Uruguay, stating that"there cannot be two [pulp] mills in Fray
Bentos"due to a lack of sufficient infrastructure– something that
had not been anticipated by the government or ENCE.2324.

Would you like to highlight experience with any of the
described cumulative impacts?

7 Franks, D.M., Brereton, D,
Moran C.J., Sarker, T & Cohen, T 2010, Cumulative Impacts - A Good
Practice Guide For The Australian Coal Mining Industry, Centre for Social
Responsibility in
Mining & Centre for Water in the Minerals Industry, Sustainable Minerals
Institute, The University of Queensland, Australian Coal Association Research
Program, Brisbane.

24 In October 2006, The Economist
speculated that ENCE had withdrawn due to pressure from the Argentine
government. (The Economist 2006, Arm-twisting: A new turn in the paper-mill
border dispute between the two countries, October 5th. Available
at: http://www.economist.com/node/8001376 Ultimately, considering only
the one remaining pulp mill, the ICJ determined that Uruguay had not breached
its substantive obligations concerning the protection of the environment
provided for by the Statute of the River Uruguay, although it had breached its
obligation to procedural obligations to co-operate with Argentina and the
Administrative Commission of the River Uruguay during the development of plans.
(ICJ 2010, Press Release: Pulp Mills on the River Uruguay (Argentina v.
Uruguay). Available at: http://www.icj-cij.org/docket/files/135/15873.pdf

Companies may contribute to cumulative human rights
impacts in various ways, including (but not limited to) those that accumulate:

As a result of the company (or its
predecessor's) actions over time (e.g. temporal cumulative impacts)

Due to concurrent activities of several
actors that accumulate in and affect a tangible, defined area (e.g. the human
rights of community adjacent to multiple commercial developments) or that
affect the public at large (e.g. as consumers)

This dilemma focuses mainly on the second
type of cumulative impact (although in practice there is often overlap between
the two categories).

Please
provide us feedback in the Forum if further guidance would be
helpful in relation to the first of the two kinds of cumulative impacts.

Company human rights and social impacts that
accumulate over time (temporal cumulative impacts) and ‘legacy impacts'

Companies may face allegations of human
rights and social impacts in respect of their cumulative impacts over several
years. Moreover, where stakeholders call upon companies to address impacts that
have accumulated over time, they may also include ‘legacy impacts', that is,
the impacts the company may have inherited through mergers, acquisitions or
joint ventures, for example. These impacts may be "seen as ‘out of scope' in
standard environmental and social impact assessment practice".25

A
high profile example of a dilemma concerning temporal and legacy cumulative
impacts is the well-publicised legal claim (in the US and then Ecuador) brought
by 30,000 plaintiffs in respect of the Lago Agrio oil field in Ecuador. The claim was brought against Chevron as it acquired Texaco's
refining operations in 2001. The case concerned the cumulative
health impacts of 23 years of oil production in the area, described as a "crime
against humanity" by the Ecuadorian President in 2006.26 In
2012, Chevron was ordered by the Ecuadorian court to pay US$18 billion in
damages – the largest judgment ever awarded in an environmental lawsuit.
Chevron disputes the attribution of the entirety of the pollution and health
problems in the region to its activities, citing bacterial
contamination from human or animal waste in drinking water. It has further stated
that "Chevron
should [not] be held accountable for addressing the overall problems of the
region, caused because the government and the state oil company who are
unwilling or unable to shoulder their responsibility".27

Acid mine drainage is an example of a cumulative impact that
is currently being tackled in the historical gold mining region of Gauteng in
South Africa. The region is home to multiple abandoned deep mine shafts – which
are accumulating water due to a lack (in many cases) of active de-watering – as
well a number of active shafts. As water accumulates in the voids of the
numerous abandoned deep shafts, increased salt-loading results in the
acidification of water that can then decant into other water bodies – causing
water contamination in both rural and urban areas – with potential risks to
both health and livelihoods. These underground shaft systems are often
interconnected, making it difficult to identify the exact source of
contamination. Likewise, many of the previous mine owners no longer exist –
making it difficult for them to address their impacts. This leaves the smaller
number of recent and/or current mine operators with a major challenge in terms
of addressing a major cumulative environmental impact to which they have
(generally) not contributed to because (1) their mines are still active or (2) they
are continuing to de-water their own non-active mines – with little impact on
the broader issue. Read more on the South African government's Water Affairs
Department website.

Concurrent cumulative impacts with other actors

The examples discussed below highlight the
common areas in which companies may face cumulative impact dilemmas that arise
as a result of the concurrent actions of several actors. These actors may
include other companies, government or members of local communities. The
scenarios discussed below include:

Natural resource impacts

Emissions in air and water sheds

Effects on consumer health

Portrayals in entertainment

Inward migration spurred by new corporate
projects

Cumulative impacts on the supply chain

Integrated industrial plants and special
economic zones

Natural resource impacts

Water-related
cumulative impacts

Access to water
raises risks of impacts to the right to an adequate standard of living and the
right to health, among others. Moreover, in 2010 the UN General Assembly28 and the UN Human Rights Council29
passed resolutions on the recognition of the human right to water and
sanitation, and numerous countries have recently passed legislation on access
to safe drinking water.30 This has taken place in the context of increased focus by civil
society and communities on corporate impacts on water availability.

Depletion: Companies using water in water-stressed areas are seen as
creating problems in urban and rural settings by lowering the water table

Pollution: Companies operating near a water source can be seen as
contributing to the contamination of water due to chemical use, dumping of
waste and other practices – causing health problems in humans and animals,
crop damage and, in extreme cases, communities having no choice but to
relocate

Access and
affordability: Company activities may block
access to clean water resources and also lead to stakeholders turning to
more expensive alternatives to traditional sources of water

Conflict: Community concerns about water can lead to confrontations with
companies and within communities

Gender-related
impacts: Corporate water use can potentially
contribute to impacts on women and girls in a disproportionate way (with
this group potentially facing exposure to violence when travelling further
to get water in certain areas)

In many cases, the adverse effects
experienced by communities are as the result of the incremental contributions
of many different actors drawing from the same watershed, or discharging into the
same water bodies. The dilemma
is exacerbated where relevant governments are not meeting their duty to respect,
protect and fulfil human rights, due to dysfunctional water governance systems and/or
absent/unenforced local legislation and regulations.31

Land
acquisition/control

Corporate impact assessments seldom consider the pattern of
land acquisition, lease or expropriation (i.e. from which they benefit) in the
area surrounding their proposed or actual operations. However, the acquisition,
lease or expropriation of land by several companies in the same area can have a
significant cumulative impact on the freedom of movement and right to an
adequate standard of living of local communities, among others. For example, as
outlined above, following a critical number of corporate land purchases for
mineral exploration in an Asian state, nomadic herders found their access to
grazing lands restricted and communities complained of being pushed outwards
into areas with limited access to essential services32.

Allocation of land to companies by governments without a
comprehensive plan can lead to human rights impacts, such as in Tete province,
Mozambique, where in 2012 mining concessions and exploration licenses covered
60% of the area of Tete Province. As a result of a lack of land availability, HRW
has reported that former farming communities have been resettled by Vale and
Rio Tinto to land of "of deeply uneven quality, unreliable
access to water, and diminished access to key sources of non-farming income."33

According to the Oxfam Briefing Paper Land
and Power , the world is experiencing a "modern-day land-rush" following
the 2007-2008 food prices crisis.34
They also report that an area the size of Western Europe has been sold or
leased in developing countries since 2001, often to produce food and biofuels
for foreign markets.35
Companies can face dilemmas in ascertaining whether their specific acquisition,
lease or expropriation of land, even obtained with free, prior and informed
consent, may be part of a wider, incremental alienation of peoples from land.

Raw
ingredient sourcing and cumulative over-harvesting

Multiple companies sourcing raw ingredients for products
such as medicines or food and beverages in the same geographical area can
cumulatively impact local communities' right to food. Although each individual
company may source only a reasonable amount of the natural resource in
question, such as local wild flora, the cumulative effect on total local
supplies can be serious.

This can be
illustrated by the over-harvesting of Hoodia, a plant native to many
southern African countries and consumed by members of the indigenous San
community for long hunting trips, during which the hunters can't regularly stop
for food. A rush of interest in this plant's appetite suppressing effects led
to its commercialisation as a functional food (for example by Phytopharm and
Unilever) and as a herbal supplement by a large number of relatively small companies.36 Corporate
harvesting seriously affected local supply and the San's ability to sustain
itself on hunting trips – allegedly impacting their right to food. Hoodia was
added to Appendix II of the Convention on International Trade in Endangered
Species of Wild Flora and Flora in 2004.37
Nonetheless, in 2006 the trade had "escalated exponentially—in many cases
illegally—from just a few tons to more than 600 tons of wet, harvested material
per year"38.
Eventually a benefit sharing agreement was signed between the South African San
Council and the South African holders of the patent "that
followed research and development of new technology related to the Hoodia plant",
the Council for Scientific and Industrial Research.39
To read more about the case, click here.

Contribution to emissions into air and watersheds

Responsible companies regularly monitor their water- and
air-borne emissions, to maintain compliance with regulatory limits and
internationally-accepted standards. However, cumulative emissions into
air or watersheds can rise to levels that endanger health, lives or
livelihoods.

The IFC's Performance
Standard 1 gives examples of the cumulative impacts that private sector developers
may need to consider, including "incremental contribution of gaseous emissions
to an air-shed" and "increases in sediment loads to a watershed".40
Whilst the IFC has not made an explicit link between these ecological
cumulative impacts and human rights, HRW has identified potential cumulative
human rights impacts of air pollution in the context of "the high concentration
of mining projects in Tete Province", Mozambique41.
Moreover, Rio Tinto has identified this challenge in its "Why Human Rights
Matter" publication, noting that:

"A community
may raise a concern about health impacts from dust, which affects the right to
a clean environment and the right to health. Environmental monitoring may
indicate that dust levels from our operations are well within legal limits.
However, if there are several companies or industries operating nearby, the
combined levels of dust could pose a serious health risk or severely affect
quality of life."42

The IFC highlights a situation in which a company planning a
metals refining operation in an emerging market economy conducted a risk
assessment and "concluded simply that because the concentration of heavy metals
in the discharge to a river would be lower than the country's discharge standard
[,]the project should proceed…"43
However, in reality human health was threatened in the area by the cumulative
impact of several other emitters into the river, some of which exceeded national
standards. The IFC reports that when cumulative impacts were considered,
responsible options included (a) project relocation; or (b) a reduction in discharges
to the greatest extent possible – with additional mitigations to reduce
loadings from existing sources.

Advertising and media portrayals

Cumulative impacts do not only accumulate on a
‘geographical' basis; responsible businesses can also face dilemmas with
respect to their cumulative impacts on the public at large (including consumers
and potential consumers). For example, the effect of a single company
advertising a high-sugar or high-fat product to children (or their parents) may
be negligible. However when many companies do so – and such advertising becomes
more pervasive – it may contribute to a broader cumulative impact on childhood
obesity and the right to health.

Similarly, evidence suggests that the regular portrayal of
the ideal of a skinny figure in women's magazines has an effect on the
prevalence of eating disorders44
– and thus may also impact on the right to health. A well-known study measuring
the eating attitudes and behaviours of adolescent girls in Fiji prior to the
introduction of regional television and following prolonged exposure, indicated
that these adolescents exhibited a significant increase in eating disorders
following such exposure.45

Inward migration spurred by new corporate projects (and
resettlement)

The establishment of a corporate project (for example a new
mine or major manufacturing facility) in a particular location can have significant
positive impacts on the livelihoods of local people.46

However, the influx of people accompanying new projects – and major
extractive projects in under-developed regions in particular – can also have
adverse local socio-economic consequences (colloquially known as ‘boomtown
effects'). This includes, for example, inflation of housing and/or food prices,
higher levels of disease (including sexually transmitted diseases), increased
crime and insecurity, pollution and increased strain on public infrastructure
and services (such as childcare). These effects can impact the right to an
adequate standard of living and to security of the person, among others.

Companies' risk and impact assessments
often consider ‘boomtown effects' with respect to their own operations
(although the ICMM
notes that this area of "potential importance from a human rights perspective",
is "not always well covered within ESIAs"47).
However, the ESIA may not identify the cumulative human rights impacts caused
by several projects in the area48,
or may not do so with a human rights lens. In addition, they may not consider
cumulative impacts where other contributors come from outside the industry. For
example, a leading company in the extractives industry has noted that its ‘boomtown'
impacts can combine with similar impacts from tourism in various areas in Africa.
Moreover, if undertaken only once, and/or without considering probably future
projects, such an assessment may miss cumulative impacts that arise when new
companies subsequently enter the area.49

Similarly, an extractive company that was engaged with during the
development of this paper noted that resettlement has the potential to cause
adverse cumulative impacts where several different companies relocate different
segments of a community without a coordinated approach.50
In this context, the company reports facing a dilemma situation in a developing
country where government directives in fact exacerbated the problem by planning
relocation without due consideration for kinship relations and the fabric of
the overall community, and few other companies in the area were prepared to
question such an approach.

Cumulative impacts on suppliers

Companies sourcing from the same supplier – or even a
specific ‘region' of suppliers – can contribute to cumulative impacts.

Decisions about disinvestment on human rights grounds are
always delicate balancing acts for companies. It can depend on the size of a
company, the nature of its business activities, the resources involved, the
potential profits to be made from investment, as well as other complex factors
in the country of operation.51
As part of the decision-making process, one factor that should be taken into
account is that when several companies pull out of a region simultaneously, it can
potentially impact the right to an adequate standard of living for workers in
the supply chain. In turn, this can – despite good intentions – result in a
negative human rights impact itself. In this context, the UN Guiding Principles
on Business and Human Rights require that companies consider the potential
human rights impact of ending business relationships (Principle 18,
Commentary).52

Following the tragedy of the collapse of the Rana Plaza
factory in Bangladesh in 2012, for example, the media reported that the Walt
Disney Corporation had ceased sourcing from suppliers in the country due to
concerns about worker safety.53
However, some commentators,
worried about a ‘domino effect' of companies pulling out of the country, urged
companies to stay in Bangladesh, due to the positive cumulative impact
that business can have in providing jobs in the manufacturing sector and
alleviating poverty.54

Which of these areas
do you consider to be the priority in regard to remediation? Would you like to
highlight experience with any of the areas of cumulative impacts? What are some
other cumulative impact scenarios?

51 For example, as was seen in
Sudan during 2007-2008: companies such as Siemens opted to pull out of the
jurisdiction in 2007 on the basis of humanitarian concerns (Washington Post,
20 Jan 2007) whereas Petrofac announced a decision to stay and try "to use its
leverage to influence the government there" (NY Times, 23 May 2008).

The dilemma of cumulative human rights impacts is not
restricted to emerging growth economies or developing countries. For example, a
leading extractive company that was engaged with as part of the development of
this paper reported that although, on the whole, management of cumulative
impacts in developed countries is done better, these jurisdictions still pose
their own challenges due to the higher number of potential contributors to
cumulative impacts.55
Likewise, developed country governments can be less receptive to discussions
around potential human rights impacts compared to many developing country
governments, which often deal with discussions around human rights impacts more
frequently.

However, emerging economies can provide unique challenges
where:

Government structures are not in place to deal with
cumulative impacts, particularly where rapid changes are taking place in
the investment environment

Governments may lack the technical knowledge or resources
to recognise that government activities and/or policies may be
contributing to cumulative impacts

There are few established relationships between companies
and across industries

Governments may be resistant to more progressive companies
taking the lead or offering solutions in respect of cumulative impacts

Managing contributions to water scarcity in India

Water scarcity in India illustrates the
dilemma faced by companies with respect to cumulative water usage. Although it
receives as much total rainfall as Ireland, the Food and Agriculture
Organization (FAO) calculates that the water available to the average Indian
citizen is around the same as the amount available to the average Sudanese.56 The United Nations Children's Fund (UNICEF) cites rapid
development, increasing population, iniquitous distribution of water and poor public
management as the factors leading to the demand for water "far outweigh[ing]
its supply".57 As part of an effort to address these challenges, the Indian
Ministry of Water Resources released a draft updated National Water Policy in
2012.58

For companies conducting business in or
sourcing from India, the space in which they operate is often characterised by a
complicated web of water users, groundwater stress and communities increasingly
experiencing the critical effects of water scarcity. Unsurprisingly, overuse of
groundwater is a "major problem" in India59 and civil society closely scrutinizes corporate water use. In its
2012 "Action framework for agriculture and food security", the FAO encourages companies to estimate the likely impact of
their production on local water supply – demand balances, and expressly links
this to "the firm's reputational risk."60

A company that was engaged with as part of
the development of this paper encountered the dilemma of cumulative impacts on
water supply in respect of its plant in India. The company's due diligence found
that the groundwater levels in the unconfined aquifer from which it was drawing
water were dropping, impacting the livelihoods of the community. Upon further
investigation, the company calculated that it was responsible for less than
0.5% of water withdrawals at peak times, which was well within regulatory
limits and below the withdrawals made by other industries, such as farming. However,
the company was perceived as a major contributor to the problem due to its
profile and the nature of its products.61

Companies should of course bear in mind that the problem
is not relevant to India alone – the FAO notes that "water use has been growing
globally at more than twice the rate of population increase in the last
century" and predicts that by 2025, 1.8 billion people will be living in
countries or regions with "absolute" water scarcity.62 For all actors involved in water governance, "business as usual is
not an option".63

Cumulative impacts of the mining sector in Mongolia

Although not a member of the BRIC or N11 countries, in 2012 the
International Monetary Fund (IMF) described Mongolia as "one of the fastest
growing economies in the world".64
In 2011, growth reached 17% and "remained in low double digits through the
second quarter of 2012."65
However, Mongolia's economic growth decelerated in 2014 to 7.8% reflecting a
drop in FDI.66

A country rich in natural resources, Mongolia owes this growth
to "the FDI [Foreign Direct Investment]-financed development of the mining
sector".67
The IMF believes Mongolia's copper and coal production is set
to expand "considerably" in the five years from 2012 and between 2013-2017growth of mineral GDP is predicted to stay at an
average of more than 20% a year.68 In addition to increased production at the existing Tavan Tolgoi
coal mine (owned by state-owned Erdenes Tavan Tolgoi), and the eventual commencement of production at the "massive" Oyu
Tolgoi copper (and gold) mine (66% owned by Rio Tinto via Turquoise Hill and 34%
by the government), Mongolia is seeing the "ongoing development of new large
mining projects."69 As such, both existing and new mines face the challenge of addressing
the cumulative impacts of the rapidly developing mining sector.

The report of the official country visit to Mongolia by
a member of the UN Working Group on business and human rights noted that "mineral exploration has
required herders to move their herds to more remote regions, for longer periods
of time, limiting their access to education, health care and social welfare services." 70

In this context, responsible companies may
want to consider the Working Group's recommendation that businesses operating
in Mongolia address the impacts to which they contribute, and share their
experiences with other enterprises within and across sectors in Mongolia.71 At the same time, businesses should be aware that the Working Group
also recommended that the Mongolian government strengthen its capacity to
protect its citizens against corporate human rights abuses. Suggestions for the
government included:

61 Owens, A 2013, Report of
Expert Roundtable on Collective Human Rights Impacts, Working Group on
human rights and transnational corporations and other business enterprises, 8
May 2013, Atlanta. [Publication forthcoming].

Companies should be aware of the risk of negative
publicity generated by civil society in respect of cumulative impacts to which
they contribute incrementally. As noted above, cumulative impacts can by their
nature be among the most serious impacts of business activity, affecting the
health, livelihoods and other rights of communities.

Examples
of reputational damage

The 47 companies operating in the Alberta oil sands experienced
reputational damage associated with the expansion of the industry, its
contribution to the cumulative impact of climate change and its associated
human costs. According to Environment Canada (Canada's
department of environment), between 2010 and 2020,Canada's carbon
emissions (excluding those from its oil sands industry) are set to decline by
28 million tonnes ofCO2. However, increased production in the
oil sands sector is expected to result in Canada's overall oil and gas
emissions increasing by 44 million tonnes (28%) over the same period.73 According to a recent paper by Boutilier and Black, US-based
philanthropic foundations provided large amounts of funding to activists groups
to carry out a ‘tar sands campaign'.74 Groups began using terms such as "dirty oil" and "blood oil"
in reference to products produced by the companies operating in the oil sands.75 As will be discussed below, this represented
a marked contrast to the predominant view that the industry was
"collaboratively and creatively" addressing other cumulative impacts associated
with the expansion.

Likewise, reputational damage has affected retailers alleged
to contribute to eating disorders through marketing images. In July 2012,
newspapers in the UK reported that British clothes retailer Topshop took down
an image of a model from its website after receiving pressure from civil
society. A spokesperson from anorexia charity Beat, was quoted
as saying:

"Images like
this are affecting young girls more than ever before. Topshop needs to take
some responsibility and use healthy models."76

Companies
as a key target in ‘multi-actor' cumulative impacts

When cumulative impacts are the result of a combination
of corporate, government and local activity, companies may provide a more
attractive target for activists where governments and laws are slow to respond.
In its 2013 report on community resettlement by Rio Tinto and Vale in
Mozambique, HRW states that human rights impacts arose both from "serious
shortcomings in government policy and oversight and in private companies'
implementation" of resettlement plans.77 However a community member indicated that protests blocking the
railway transporting Vale's coal shipments were more effective than approaches
to the government, stating that:

"When we tell all of our complaints to the [provincial level]
permanent secretary, we know there is no answer. If we close the railway, they
will come to us".78

Moreover, civil society may believe (sometimes
correctly) that companies have a greater ability to sway government laws and
policies than do other actors.

In certain cases – and particularly in the case of
high-profile brands – companies may consider activist pressure to be disproportionate
to their actual contribution to the cumulative impact. For example, it is worth
considering the following two examples in the context of corporate use of water
(and allegations of contribution to water shortages):

A company that was engaged with as part of the
development of this paper measured its withdrawals from a watershed in an
emerging market as less than 0.5% of all withdrawals at peak times. However,
its contribution to water-stress in the region has been the target of
civil society campaigns that apportion responsibility for a lack of water
(including an insufficient amount of water available for local farms) to
the company alone.

In Canada, Nestlé has challenged restrictions
placed on its permit to draw water during times of drought in Ontario.79 Nestlé's Corporate affairs director has noted, inter alia,
that the quarries and golf courses in the area are not subject to mandatory
water-drawing restrictions, stating that "they get a free pass, and we
don't … it's an issue of fairness" and he has expressed the view that the
company was being unfairly targeted "because we're a large multinational
corporation."80 A petition launched on the "SumOfUs" website asking Nestlé to
"stop draining Ontario's
watershed to bottle water" has gathered more
than 130,000 Facebook ‘likes' and more than 4,600 ‘tweets' on Twitter.81

These examples also illustrate the fact that civil
society tends to reject corporate explanations that rely on – and limit their
responsibility for remediation to – the ‘percentage contribution' of the
company to an impact. For example:

In its legal defence and its "Open Letter to the
People of Ecuador", Chevron asserts, inter alia, that its remediation of
the Lago Agrio oil field in Ecuador was "reflective of Texaco's
approximate 1/3 share of the oil-producing consortium with Petroecuador."82
However it still experienced extremely negative publicity and was subject
to a local court judgment of US$18 billion for the cumulative health
impacts of remaining oil pollution in the area

In response to a civil society campaign targeting its
use of water, Nestlé noted
(in addition to its efforts to reduce water usage and address its impacts through
a global water due diligence programme) that "Nestlé Waters uses
only 0.0009% of global freshwater withdrawals."83
However, this figures has done little to stem civil society concerns

According to Makoto Teranaka, a long-standing human
rights activist based in Japan, civil society organizations will often target ‘secondary'
contributors to cumulative impacts (as opposed to the company identified as
being the greatest contributor to the impact) if it is believed that the
secondary contributor has a more recognizable brand or greater corporate
influence.84

Additionally, civil society increasingly expects businesses to join
collaborative initiatives aimed at addressing members' contribution to
cumulative impacts. For example, UK-based multinational Topshop was the target
of a 2007-2009 campaign by NGO "People and Planet" for failing to join the
Ethical Trading Initiative85 – an alliance of companies, NGOs and trade unions focusing on supply
chain codes of conduct and collective learning around ethical trade practices.86

It can be difficult for plaintiffs and
for courts to separate out and assign responsibility for impacts

Where impacts accumulate over time,
statutes of limitations can affect a plaintiff's ability to bring a case

Despite these challenges, courts and
legislatures do find ways to deal with lawsuits involving multiple independent
contributors to the same harm. Sometimes claims are made under different
branches of law, such as domestic tort law, criminal law, contract law or
company law and at other times under international and human rights law.

It is important to distinguish between
complicity and our definition of cumulative impacts, as both represent a form
of "contribution" to human rights impacts under the UN Guiding Principles. This
dilemma does not concern complicity – for example, the knowing assistance in
the commission of a crime by another entity87 – but rather the contribution to a total impact that is the result
of the actions of more than one actor. This distinction is discussed further in
the Background section.

Joint contributors to breaches of international law

International human rights are grounded in
international law. Thus, companies that directly contribute to human rights
abuses risk legal consequences for breach of international legal standards.
Victims of such breaches can (depending on circumstances) pursue wrongdoers "in
multiple arenas - in national courts, international tribunals and international
arbitral bodies".88 Each judicial body will deal with the question of apportioning
liability for cumulative impacts differently.

The issue of separate contributors to a
breach of general international law was raised in a case involving damage
caused by mines wrongfully laid in the Persian Gulf during the Iran/Iraq war ("Oil
Platforms" case). 89 Both
Iran and Iraq had laid mines in the area in which a United States Navy warship
suffered damage after striking a mine. The United States could not prove
whether it was a mine laid by Iran or Iraq that caused the damage, however one
judge expressly stated that this did not preclude the US from claiming against
Iran for all of the damage (see below for details).

Where claimants seek to enforce international human rights law
against a company through domestic courts, however, the issue is complicated by
the competing views on whether corporations should even be subject to
international law.90 For example, the United States' Alien Tort Statute (ATS) allows federal courts to hear tort claims by non-US citizens
alleging violations of "the law of nations." In 2010
the US Supreme Court "explained that because corporate liability
is not a discernible norm of customary international law, the ATS should not be
interpreted as having authorized suits against corporations.91 The position in the United States – regarded (until recently at
least) as "the principal domestic forum for resolving international human
rights violations"92 – was not resolved by the Kiobel decision in 2013.93

Nevertheless, according to a 2011 paper by
US law professor Roger Alford - "as international law increasingly creates
rights and imposes duties on non-state actors, it is inevitable that questions
of joint responsibility will arise".94 He further notes that, "questions surrounding the apportionment of
fault among joint tortfeasors who violate international law are, or soon will
be, among the most important and unsettled in human rights litigation".95

It is useful to look to domestic legal
treatment of this issue as courts seeking to deal with apportionment of
responsibility for breaches of international law "will resort to domestic tort
law in one way or another".96

Claims in tort for civil wrongs

The more common means for addressing
violations is often through the application of domestic tort law. The practice
of apportioning responsibility between wrongdoers will obviously differ
depending on the country. In the Oil Platforms case, Judge Brunno
surveyed American, Canadian, British, French Swiss and German law and concluded
that there was a general principle of law that one contributor could be liable
for all of the damage caused.97 In his paper, however, Professor Alford expressed doubts about the
broader applicability of this principle, noting that this is not the case in
China or New Zealand. Moreover, he noted that the approach in the United States
differs depending on the states, which often take different factors into
account, such as:

Sometimes it is simply impossible to divide
the harm suffered by the victim and assess the degree to which each wrongdoer
contributed to the harm. Most of the cumulative impacts we have considered in
this dilemma would fall within that category. A 2004 study99 of the laws of 15 countries concluded that in such cases of
indivisible harm, a generalised standard would provide that the victim should
be able to sue any one of them for all of the damage (i.e. on the basis of
joint and several liability). The wrongdoer sued would then be forced to
pursue other wrongdoers for their contribution.

Judicial and legislative approaches to
indivisible cumulative impacts from asbestos: Australia and the UK

Australian and English courts have been
faced with the legal difficulties surrounding multiple contributors to health
impacts from the inhalation of asbestos fibres. Asbestos has been used in
construction and building materials and is now banned in several countries. Although
a single exposure usually won't lead to harm, the prolonged inhalation of
asbestos can result in respiratory diseases, such as mesothelioma. These
diseases have a long latency period, with symptoms appearing 12 to 20 years
later.100 Further, where a worker has been exposed to asbestos at multiple
sites, it is usually impossible to pinpoint which employer caused the disease.
In Australia and the UK, the respective governments have chosen to amend their
legislation to assist plaintiffs in bringing such claims.

In the United Kingdom, the House of Lords
held, in a 2002 case called Fairchild v Glenhaven Funeral Services101, that a worker who had been exposed to asbestos dust at
different times by more than one employer, and who had subsequently contracted mesothelioma,
could sue any one of the contributing employers, without having to prove
exactly which contributor had caused the disease.102 However in 2006,
the House of Lords came to the opposite conclusion in another case, holding
that employers who exposed an employee to asbestos dust would be severally (not
jointly) liable – meaning that they would be responsible only in relation to their
proportional contribution to the employee's mesothelioma.103 Following
condemnation of this ruling by trade unions and activist groups, the British
government amended the Compensation Act 2006. Section 3 of the Act now provides
that in cases of mesothelioma, each contributor to the harm is liable to the victim
for all of the damage caused by the disease – although the defendant may then
sue others responsible to recover their contributions.

In Australia, meanwhile, laws were amended
so that the time limit within which a claimant may commence a legal action is
now calculated from the time of discovery of the illness, rather than the time
at which the disease was contracted. In this way, the law was modified so as to
accommodate claims concerning asbestosis, which results from exposure over time
and has a long period of latency.

Recent case: Silicosis in South Africa

In December 2012, a South African law firm sought certification to
bring a class-action lawsuit in South Africa on behalf of as many as 17,000
ex-gold miners suffering from the lung disease silicosis.104 A total of 29 gold mining companies105 that owned or operated 78 different gold mines from 1965 to the
presentday were listed as defendants, including African Rainbow Minerals,
AngloGold Ashanti, Gold Fields and Harmony Gold.106 The
plaintiffs allege that the miners contracted the disease while drilling gold
bearing rocks, and that the companies, knowing of the dangers, failed to take
adequate measures to protect the workers from this exposure. Many of the
plaintiffs worked at several different mines over the span of their career: for
example, the plaintiffs' attorney refers to a Mr. Boxwell, a former gold mine
worker living in Butha-Buthe, Lesotho, who worked in four different mines over
a 23 year period.107 The case is continuing.

Separately, Anglo American South Africa reached a confidential financial settlement
with 23 silicosis sufferers in September 2013. Commentators have noted that
silicosis cases are more likely to settle than to reach a final verdict. This
is partly due to uncertainties around the legal standard for causation: do the
plaintiffs need to prove that their silicosis was caused by a particular
company, or merely that each company was negligent in respect of their safety?108 Another reason cited is the
fact that many of the subsidiaries that employed the plaintiffs no longer
exist, and "taking on responsibility for subsidiaries that no longer exist may
be a concession the industry cannot afford to make."109 The lawyers for the plaintiffs
have called for an industry-wide settlement,110 in which case the degree of
responsibility of each company for the workers' silicosis may become a vital
issue.

Corrective legislative action

As civil society places increasing pressure on governments
to regulate cumulative human rights impacts, companies are likely to face new
risks and opportunities in the form of new legislation creating taxes, limits
or prohibitions on contributions to cumulative impacts.

This is
particularly the case where industry does not self-regulate its contribution to
cumulative impacts. For example, in January 2013, the United Kingdom's health
secretary announced that the government is considering introducing new laws to
limit the amount of sugar, salt and fat in processed foods to curb
childhoodobesity. However, he
intends to give supermarkets and manufacturers a chance to get their
"house in order" before resorting to legislation.111

Likewise,
taxes on sugary beverages have been proposed in several US cities and in late
October 2013 a proposal was introduced in San Francisco to apply a tax of 2 cents per ounce for all sugar-sweetened beverages.112

Furthermore,
there are signs of a shift in some jurisdictions towards mandatory human rights
reporting by companies. The UK, for example, has put in place regulations
(Companies Act 2006 (Strategic and Directors' Reports) Regulations 2013), that
require quoted companies to report information concerning human rights,
including information on any human rights policy and its effectiveness.113
Where definitions of human rights impacts are informed by the UN Guiding
Principles on Business and Human Rights, they will include contribution to
– as well as the causes of – impacts.

Pre-emptive judicial action

In some states, courts are taking a
pre-emptive approach to safeguarding people under its jurisdiction from
potential cumulative impacts. The results of a UN Global Compacts study on corporate water use cites a
number of cases of courts suspending company activities where there is a risk
that the company's water use could adversely affect local communities' basic
water needs.114 The authors consider that this reflects a shift in prioritization
following the emergence of the human right to water and sanitation.115

For example in 2004, the High Court of
Sindh at Karachi issued an injunction restraining Nestle Milpak Limited from initiating
any commercial or industrial activities, including the construction of a
bottling plant, in Karachi's Deh Chuhar area. 116 The
company had planned to tap into an aquifer through tube wells, and several
institutions in the area had argued that its "excessive use of groundwater"
would "affect the persons in the neighborhood". The court referred to a
previous decision against Coca-Cola in Kerala, as well as Principle 2 of the Stockholm
Declaration, which requires natural resources to be safeguarded for the benefit
of present and future generations. The court found that the company's proposed
extraction of water would "adversely affect the rights of plaintiffs to use the
underground water according to their genuine needs".

Financial risks

Contributions to cumulative impacts can impact companies
financially over the long term and on a collective basis. Companies can, for
example, see increases in operating costs and the cost of raw materials due to
a scarcity of poorly managed resources.

Contributions to cumulative impacts can also impact sales
and investment. As more consumers and investors prioritise ethically
sourced/green/fair trade items, it becomes smart business to appeal to this
market.117
The Dow Jones Sustainability Index is one example of how companies are reacting
to investor pressure in this regard. Moreover, companies that contribute to
impacts without engaging in collaborative mitigation/remediation efforts can be
left "out in the cold" when competitors collaborate and brand/certify their
products as not contributing, or contributing less, to the particular
impact.

Cumulative impacts can also directly impact a
company's consumer or employee base. A company in the food and beverage sector
has reported that it considers cumulative impact risks to pose direct financial
risks in emerging markets. This is because the community surrounding its plants
– and those potentially affected by cumulative water or emissions impacts, includes
employees and the consumers of its products. As such, cumulative impacts
affecting the health and well-being of its workers affect productivity, and those
affecting the health of surrounding communities affect not only its social
license to operate, but also its consumer base.

Furthermore, contribution to impacts can also affect access
to finance. The corporate responsibilities set out in the UN Guiding Principles
(which include contributions to adverse impacts) have been incorporated into
the Equator Principles and
various export credit regimes. As more and more institutions take up the UN Guiding
Principles, obtaining international finance whilst ignoring cumulative human
rights impacts may become a challenge.

93 In the Kiobel
litigation, the US Second Circuit Court held that corporations are not liable
under the United States' Alien Tort Claims Act. As a result, foreign plaintiffs
could not sue US corporations at home for, for example, breaches of human
rights committed abroad. The question was then put to the Supreme Court but it
did not need to decide the issue as it dismissed the plaintiffs' lawsuits on
the grounds that their claims did not sufficiently "touch and concern" the
United States. Kiobel
v Royal Dutch Petroleum Co., 133 S.Ct. 1659 (2013).

116Sindh Institution of Urology and Transplantation
and Others v. Nestle Milkpak Limited and Others, High Court of Sindh at
Karachi, Original Civil Jurisdiction, Suit No. 567 of 2004, (30 November 2004).
Text of the judgment is available at: http://www.shehri.org/subpages/nestle.pdf

For a company to responsibly address its
contribution to cumulative human rights impacts, it should first look to comply
with any relevant laws in the country of operation. Where relevant laws do not
exist, or are set lower than international standards, then companies should
strive to meet these higher standards.

To meet this responsibility to respect human rights, the framework
provides that a responsible company should engage in human rights due diligence
to a level commensurate with the risk of infringements posed by the country
context in which a company operates, its own business activities and the
relationships associated with those activities.

The framework, as clarified by the Guiding Principles,
specifies the main components of human rights due diligence:

A policy statement articulating the company's commitment to
respect human rights and providing guidance as to the specific actions to be
taken to give this commitment

Periodic assessment of actual
and potential human rights impacts of company activities and relationships

Integration of these
commitments into internal control and oversight systems

Tracking of performance

Public and regular reporting on
performance

Remediation

Effectively addressing company contributions to cumulative
human rights impacts raises many of the challenges associated with addressing the
impacts of individual companies. However, additional challenges predictably
arise where the company is only one of a number of parties contributing to an
impact. The below provides specific actions that companies may consider in
order to address cumulative impacts.

1.
Assess cumulative human rights impacts

When conducting a periodic assessment of actual and
potential impacts in line with the Guiding Principles, a company should take
into account impacts that they may:

Cause or

Contribute to through
their own activities, and those which may be

Directly linked to their
operations, products or services by their business relationships.

Cumulative impacts fall under those impacts that the
business may ‘contribute to' (see (b) in the diagram below). The other way of ‘contributing
to' a human rights impact is by way of ‘complicity' in the abuse of another
party (see (a)) in the diagram below).

Figure: Cumulative impacts within the context of the UN
Guiding Principles

However risk assessments – whether undertaken with respect
to new or existing projects – do not often consider cumulative human rights
impacts.118
Early assessment of cumulative impacts will help companies to identify and
prevent or mitigate their contribution to the impact, and to use leverage to mitigate
the remaining impact. This is already being recognised by some leading
companies. For example, Rio Tinto's human rights policy recognises that when it
identifies human rights-related issues, "some risks may arise from the
cumulative impact of multiple operations and may not be solely attributable to
Rio Tinto".119

Learning from the ESHIA field

There is little published guidance in relation to cumulative
human rights impact assessment. However, companies in the extractives industry
are likely to be familiar with environmental "cumulative impact assessment"
procedures, whether undertaken voluntarily, pursuant to regulation (e.g. in
Australia and Canada) or to obtain financing (e.g. through the IFC).

Unlike traditional impact assessment approaches, the
assessment of cumulative environmental impacts shares with human rights due
diligence the consideration of project impacts from the perspective of the
affected ecosystem and community, rather than from the perspective of the company
or individual project only. There are useful insights from this field that can
be applied in the assessment of cumulative human rights impacts, including the
following:

It is important to identify
baseline conditions in an area through engagement with experts and local
stakeholders

Cumulative impacts can
aggregate on a linear or exponential basis – and can reach tipping points,
after which major changes in environmental, social and economic systems
may follow120

It is useful to identify
thresholds, which are the carrying capacities of the environment/community
in respect of the specific impact (for example, the levels of a certain
chemical in a river or air shed after which communities' fishing
activities or health are impacted).

Companies new to the management of cumulative impacts might consult
the following:

Companies' existing techniques of assessing and managing
cumulative impacts in the ESHIA field can, to the extent that they do not
already, be strengthened and expanded in scope to explicitly take into account
impacts on human rights, and not just general social and environmental impacts.123
In this context, it is important to keep in mind the particularities of human
rights due diligence (HRDD) pursuant to the GPs, including the need to

Assess impacts in the context
of international human rights law and, in conflict zones, international
humanitarian law.

"Cease" or "prevent"
contributions to impacts and use leverage to mitigate any remaining impact
to the greatest extent possible (as opposed to the various regulatory
obligations to "describe" or to "minimise" cumulative impacts in the ESHIA
field).

Defining the scope of assessment – and separating out responsibility

Inevitably, companies conducting impact assessments face
limits on their resources and time, and cumulative impact analysis poses the
challenge of a potentially wide scope of analysis. To understand if they are
contributing to an impact, companies need to look into the past, present and
future to determine the "incremental impact of their activities, products and
services when added to other existing, planned and reasonably predictable
future projects and developments" 124 – as well as
understanding existing baseline human rights conditions. Such information can
be gained from reports by reliable local and international
non-governmental organisations (NGOs), governments (see further below), trade
unions, and international agencies (including UN field missions). Above all, meaningful
consultation with various stakeholders will be an essential part of this process.

Secondly, complicated issues of causation can arise when
assessing the company's individual contribution to the impact. In the ESHIA
field, for example, the IFC notes that cumulative impacts exclude those impacts
that "would occur without the project or independently of the project."125
Sometimes this question is easy to answer; in other situations it can be a complicated
one, requiring a range of quantitative and qualitative methods to determine
just how a cumulative impact is aggregating.126
It can be challenging, for example, to obtain data on other
developments (whether past, current or future) and to understand how the
company's activities are contributing to - or may contribute to - an aggregate
impact.

In seeking to understand cumulative impacts, and the
individual company's actual or contribution to them, commentators in the ESHIA
field recommend:

"[r]esearch
[that] helps to understand the processes of [cumulative] impact generation,
accumulation and interaction. Research can develop and test
technically-rigorous methods that can be applied to identify system thresholds,
social limits, triggers to changes in system state, non-linear functional
relationships, temporal and spatial extents of impacts, synergism between impacts
and the pathways of effects."127

In the specific context of human rights, responsible
companies tackling cumulative impacts would ideally marry the above approach
(where appropriate) with the elements of human rights due diligence set out in
the UN Guiding Principles (Principle 18), including

Identifying cumulative impacts from the manifestation of risk events

In addition, ‘dramatic' events triggering a "risk response"
in the company present a potential opportunity to identify company
contributions to cumulative impacts. 128 When a severe risk
event occurs, a top-down review across all dimensions of the event,
irrespective of its source, can detect involvement in cumulative impacts.

By way of example, where a mine's tailings dam breaks, the
company would respond by remediating the impact of the release on the water
supply. However, it could also be useful to examine the social and human rights
context of the incident and its impacts. This can help the company identify
(e.g. through community consultation) the cumulative impacts of the event when
combined with of other sources of pollution exposure.129

2.
‘Selling' action on cumulative impacts internally and to stakeholders

Where a company is a main contributor to an impact, or
alternatively is the last company in an industry or area and brings about a
"tipping point" (as explained above), they are likely to have strong ‘buy-in'
on the need to detect and manage such contributions.130
In some cases, however, the company's individual contribution to the impact may
be perceived to be relatively small or inconsequential. As a result, it can be difficult
to ‘sell' the importance of action internally and to shareholders.

The reputational, financial and legal risks associated with
involvement in cumulative impacts have been set out above. Efforts should
ideally be made to ‘educate' colleagues about the legal, financial and
reputational risks that can arise from company contributions to larger human
rights impacts.

It is also useful to highlight that identifying and
preventing/mitigating contribution to human rights impacts can offer opportunities
for the company in addition to risk reduction. As discussed above, where impacts stem from resource use, addressing cumulative
impacts can lead to efficiency gains as the company, examines
and refines processes in order to reduce usage – and thereby the contribution
to the cumulative impact. In addition, it can enhance company and
industry reputation and contribute to the social license to
operate.

Innovative internal accounting procedures can also
facilitate internal action on cumulative impacts. Where a company decides to
expend funds to manage contribution to a cumulative impact, for example, it can
be useful to have these costs funded and accounted for separately, so that no
individual manager/department is required to bear the costs of a company-wide
problem/opportunity.131

Have
you discussed cumulative impacts with colleagues or shareholders? Please
contribute your comments or suggestions to our online discussion forum:

The UN Guiding Principles (Principle 19,
Commentary) require companies to cease or prevent its own contribution to a
human rights impact, regardless of the actions or inactions of other
contributors.

Many responsible companies choose to proactively take action
on their own to reduce their contribution to cumulative impacts. Such efforts are
sometimes publicised and leveraged as positive reputation enhancers for the
company or its brand(s). In June 2012, for example, Disney announced that it
would ban all junk food advertising from its TV channels, websites and radio
programmes catering to children both to "inspire and encourage [children] to
lead healthier lives"132
and to focus on the "solid" business of health food for
children.133
Disney's chairman stated that

"Companies in
a position to help with solutions to childhood obesity should do just that.
This is not altruistic. This is about smart business."134

On other occasions, more localised action will be appropriate.
For example, a company identified that its plant in an emerging market was
marginally contributing to a community water-shortage. In response, the company

Conducted a threshold
assessment of the sustainability of the water supply, at peak and average
use periods, and considered, inter alia, the impact on local jobs and food
grown through irrigation

Undertook an internal water
efficiency program, as well as ensuring full treatment of wastewater

In addition, it engaged with industry, sharing data and best
practices with other actors using the water resource, as well as trade
associations and unions. The company thereafter engaged the government at
various levels, hired a dedicated community relations manager, invested in drip
irrigation programs with local farmers and created recharge shafts to
accelerate the rehabilitation of the groundwater table.135

There are
numerous tools available if the due diligence process detects that the company
may be contributing to a particular cumulative impact. For example, the Global
Water Tool of the World Business Council for Sustainable Development has
been used by Caterpillar, The Dow Chemical Company, Lafarge and PepsiCo136
to enable them to better understand the impact of their operations on local
basins, and to address risks around water scarcity and reputation damage amongst
local communities, their own shareholders and consumers.137

It is
clearly possible to imagine scenarios in which a company's responsibility to
"cease or prevent" an impact must necessarily take place in collaboration with
other actors.

Indeed, cumulative impacts, by their very nature, transcend
the boundaries of the individual company. As such, the IFC notes that "the
resulting potential management or mitigation measures typically require
participation from a larger and more diverse number of stakeholders in order to
be coordinated and implemented."138

Collaborative initiatives can be the most effective, and
sometimes the only, method of alleviating the effects of cumulative impacts on human
rights. They provide a useful framework for

Monitoringpotential
impacts: For example, joint monitoring schemes conducted through
collaborative efforts can identify and trigger pre-determined responses
when, for example, levels of contaminant in air or watersheds rise above a
certain level139

Remediating impacts:
Grievance mechanisms that allow companies to share information and
collaborate in remediating grievances can provide solutions that address
the cumulative impact as actually experienced by individuals/communities

In addition, collaborative initiatives can

Providing a cost effective
solution for companies

Plug gaps in human rights due
diligence and risk assessments through information sharing

Help to avoid the
disproportionate ‘spotlighting' of high-profile companies whose
contributions are otherwise minimal

Sometimes collaborative initiatives will be most effective if they
are ‘industry-only', thereby creating a ‘safe space' in which participants can work
together candidly. Such initiatives can allow for information and technology
sharing between members to try to address environmental and social impacts in
the industry or area of operation. For example, the 13 companies that make up Canada's
Oil Sands Innovation Alliance (COSIA) report progress including "the sharing of
560 technologies and innovations that cost US$900-million to develop, the
selection of 185 projects with high potential worth US$500-million, and the
identification of gaps that need further action".140 COSIA is currently the subject of a Harvard study considering
whether the alliance may act as a model for other companies seeking to address
common issues such as environment and social impacts.141

Where the initiative involves competitors working together, the
inclusion of a neutral third party can help facilitate the process. For
example, Achilles, a for-profit provider of supplier
management information, plays a neutral facilitation role in the UK Utility Vendors
Database (UVDB), through which four major UK utility
companies share information. This is with the aim of shortening the sector's
procurement cycle, improving market intelligence regarding suppliers and addressing
supply chain corporate responsibility for human rights impacts.142

Collaborative initiatives can also involve a broad range of participants
from other companies, community representatives, vulnerable groups, NGOs and
government. Such multi-stakeholder forums facilitate transparency and trust, and
allow timely discussion about actual and potential cumulative impacts to take
place between companies and community representatives. Two further examples
from the environmental field in Canada include the following:

The Cumulative Effects
Management Association (CEMA) was established after leading Alberta oil
sands industry companies felt that "a project by project assessment of
cumulative impacts was inefficient and ineffective."143
Their initial working group was expanded to include additional government
bodies, local environmental groups, and First Nations representatives.

Cardinal River Coal (CRC)
conducted a cumulative effects assessment in respect of its 1996
development of the Cheviot Mine Project in Alberta.144
The assessment found that the new mine would contribute to regional
pressures on grizzly bears (including pressures relating to existing
forest harvesting, mining, oil and gas operations, and government managed
recreational activities) that were reaching the point where “population
losses will become serious and perhaps irreversible”. Cardinal River Coal
proposed that a “Carnivore Compensation Package” be created, to be jointly
supported by the new mine, the dominant forestry company in the area, some
oil and gas interests and the government.145 A
regional committee, based on co-management between the provincial, federal
and regional levels of government, scientific experts, industrial
stakeholders and citizen groups, was to clarify wildlife management
objectives and develop plans for achieving them. The programme was
discontinued, however, before this could be achieved.

The ultimate failure of the latter programme provides
valuable insight for future multi-stakeholder collaborative initiatives. A
Regional Carnivore Management Group was in fact set up by legislation in 1999,
but was terminated in 2003 following a provincial government reorganization. An
academic study146
of the initiative found that its failure at the implementation stage might have
been avoided if:

Theinitiative had
had greater ability to make decisions on its own: the provincial
government was able to "contain" the decision making process, and the
government's administrative changes were sufficient to terminate it

There had been greater
public involvement in decision making: interviewees described the
process as being "dominated" by industry and government. This hurt its
legitimacy and led to environmental NGOs withdrawing from the process in
2001 citing "collusion" between government and industry

Learning from collaboration in the ‘commons' field

Many cumulative impact challenges – and those relating
to the environment in particular – relate to what is called the ‘commons' – land or resources belonging to, or affecting,
the whole of a community. The ‘tragedy of the commons' is the well-known 1968 economicstheory ofGarrett Hardin147, who noted that self- interested individuals acting independently
and rationally according to their self-interest will deplete shared resources – even though they know that depleting the common resource is
contrary to the group's long-term best interests. He suggested that top-down,
coercive measures are necessary in such circumstances.

Later economists argued that local cooperation to manage the
commons is possible, as self-interested individuals can learn that collective
restraint serves both collective and individual interests.148 Nobel Prize-winning
economist Elinor Ostrom149
identified what she saw as the main challenges to bringing about such cooperation,
including:

Coping with free-riding

Solving commitment problems

Arranging for the supply of new
institutions

Monitoring individual
compliance with sets of rules

Based on the Achilles example (cited in the previous section),
one might also add:

‘Gaining consensus' amongst
participants

Avoiding "lowest common
denominator" solutions

Copying with "differing levels
of experience and knowledge" about human rights150

Ostrom's research into local collaborations in the 1990s concluded
that initiatives to manage the commons can take place without regulatory
coercion, provided they exhibit the following design principles:

Group boundaries are clearly
defined

A system for monitoring
member's behaviour exists (the community members themselves undertake this
monitoring)

Rules governing the use of
collective goods are well matched to local needs and conditions

A graduated system of sanctions
is used

Most individuals affected by
these rules can participate in modifying the rules

Community members have access
to low-cost conflict resolution mechanisms

The right of community members
to devise their own rules is respected by external authorities

There is an appropriate
institutional structure in place. For example, in the grizzly bear example
above, academics argued that decision making and other responsibilities
were unhelpfully concentrated in the hands of the provincial government,
rather than being delegated to the collaborative initiative151

Achieving ‘cross-boundary' leadership

At a minimum, collaboration to address cumulative
impacts requires companies to engage ‘across boundaries' with representatives
from other companies who may be from different industries, locations or markets.
This can be challenging for many obvious reasons, including differences in
corporate culture, differing commercial drivers, the degree of engagement on human
rights issues and/or reputational exposure. Missions or embassies in the host
country can provide contacts for appropriate people in other companies, and
local NGOs or international organisations operating locally can assist with navigating
across industries in order to engage with others to tackle impacts
collaboratively.

The ability to engage in ‘boundary-spanning' leadership is
the subject of an emerging field of corporate leadership studies. As challenges
become more complicated, interconnected and global, the Centre for Creative
Leadership (CCL), a non-profit organisation focusing on leadership education
and research, advises that more effective boundary-spanning corporate
leadership is needed to solve them. A 2008/9 CCL survey of 129 senior
executives identified what the authors called the "critical gap" between the:

86% of senior executives who
said that it is "extremely important" for them to work effectively across
boundaries in their current leadership role; and the

7% who believe they are
currently "very effective" at cross-boundary leadership.

Moreover, the UN Global Compact recently
published the results of a 2013 survey of 1,000 CEOs across 103 countries and
concluded, inter alia, that transformational leaders in sustainability see ‘partnerships
and collaboration' as one of seven key themes that guide the decision making:

"[A]mong sustainability leaders –
those companies achieving superior business performance and impact on
sustainability challenges – we can see the beginnings of a collaborative,
systems approach to sustainability … [including] collaborating within and
across industries and sectors…"

5.
Engage governments on cumulative impacts

Companies usually look tostate regulation to manage,
or at least to provide the structurefor managing,cumulative harms
to which theycontribute incrementally.152
Indeed, pursuant to the UN Guiding Principles, states have the foremost duty to
protect people under its jurisdiction from human rights abuses, including
cumulative impacts, through (inter alia) effective legislation and regulation.

Responsible companies overwhelmingly report a preference for
well-managed, predictable regulatory frameworks that level the playing field
and provide a stable operating environment. In the specific context of
cumulative impacts, the active participation of government is desirable to:

Assess the incremental
contribution of several project to cumulative impacts

Monitor and enforce the
implementation of the mitigation measures corresponding to each project

However, situations can arise in which government
action to address cumulative impacts, for example by way of
regional assessments, is absent or weak. According to the IFC,

"the reality is that these frameworks are rarely available in
emerging markets, and more often it is left to the private developer to try and
take into consideration not only its own contribution to cumulative impacts,
but also other projects and external factors that may place their developments
at risk."154

Moreover, a lack of official understanding of cumulative human rights impacts
can even lead to situations in which the government positively require
companies to follow directives that contribute to such impacts. A leading
mining and metals company that was engaged in the development of this paper155
reported that government directives given to several companies concerning the resettlement
locations for displaced communities both exacerbated human rights impacts and
made it difficult to mitigate the same.

Where governments lack awareness around cumulative impacts,
responsible companies can play an important role in improving understanding of
the issue. The IFC's Good
Practice Handbook on cumulative impact assessment (which focuses on
cumulative environmental impacts), provides suggestions for companies operating
in jurisdictions in which there are no regional planning or collaborative
resource management mechanisms. Transferrable suggestions include:

Discussing the purpose, process
and requirements of the company's cumulative impacts assessment process
with government at an early stage

Stressing the benefits of
government participation and collaboration in cumulative impact
assessment, proposed management strategies and impact monitoring156

Engaging government on human rights issues of any kind can
be challenging, and in the case of cumulative impacts, can be particularly difficult
when the government is a co-contributor. Government representatives may be more
likely to be responsive if the process also involves an authoritative third
party, such as an independent consultancy or reputable NGO.

Do
you have experience of working with government agencies on addressing cumulative
impacts? Please contribute your comments or suggestions to our online
discussion forum:

125Ibid. This can be a
useful guide for determining if the company is "contributing to" an impact, but
it is important to bear in mind that such impacts must still be considered if
they are "directly linked" to the company through a business relationship,
pursuant to the GPs.

126 Harrison, J 2012, ‘An
evaluation of the institutionalisation of corporate human rights due
diligence', University of Warwick School of LawLegal Studies
Research Papers, no. 2012-18, p. 8. Available from SSRN

Cumulative human rights and impacts can be caused by various
activities and actors, and can often be the impacts most severely affecting
communities. The table below offers some examples of cumulative human rights impacts,
and the source of the rights. ‘ICESCR' represents the "International Covenant on Economic, Social and Cultural
Rights".

Right

Source of right

Examples of cumulative impacts

Right to health

ICESCR, Article 12

Reduced
water availability for local communities as a result of the collective demand
from multiple mines on groundwater

Increased
transmission of HIV/AIDS as a result of increased in-migration to major
extractive projects

The targeted
advertising of high-sugar foods and drinks at children by multiple retailers
– contributing to long-term child obesity

Long-term
health problems amongst local people as a result of cumulative air and water
emissions from multiple industrial facilities concentrated into a single area

Right to adequate standard of living (right to food)

ICESCR, Article 11

Water emissions from several factories that flow into a
single waterway – reducing fish stocks and undermining local livelihoods and
nutrition

Right an adequate standard of living (right to housing)

ICESCR, Article 11

Price inflation, pressures on social services and
increased levels of anti-social behaviour in towns near to or hosting extractive
projects that attract a large influx of actual/aspiring workers and their
families (e.g. housing, rents and access to medical services).

Right to enjoy just and favourable
conditions of work

ICESCR, Article 7

Pressures placed upon a supplier by several customer companies
during peak periods, causing them to encourage their workers to exceed safe
overtime limits.

Do
you agree/disagree with the relevance of the above examples to human rights law?
Do you have further examples to contribute? Please contribute your comments or
suggestions to our online discussion forum: